NOTE

—ACCOUNTING FOR STOCK-BASED COMPENSATION

Stock Incentive Plans

June

2015,

the Company

’s stockholders approved an amendment (the “Amendment”) to the ICF International, Inc.

2010

Omnibus Incentive Plan (as amended, the “Omnibus Plan”). The Amendment, among other items, increased the new shares available for issuance under the Omnibus Plan by

1,540,000

shares from

3,550,000

5,090,000

(for an aggregate

5,966,186

shares, which includes shares that remained available under the

2006

Long-Term Equity Incentive Plan when the Omnibus Plan was initially adopted). The Omnibus Plan provides for the granting of options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, cash-based awards, and other stock-based awards to all officers, key employees, and non-employee directors of the Company. Under the terms of the Omnibus Plan, shares awarded that are not stock options or stock appreciation rights, are counted as

1.93

shares deducted for every

one

share delivered under those awards. Shares awarded that are stock options or stock appreciation rights are counted as a single share deducted from the Omnibus Plan for every

one

share delivered under those awards. As of

December

31,

2016,

the Company had approximately

2.2

million shares available to grant under the Amended Plan. CSRSUs have no impact on the shares available for grant under the Omnibus Plan, and have no impact on the calculated shares used in earnings per share calculations.

he total stock-based compensation expense for the years ended

December

31,

2016,

2015,

and

2014,

the unrecognized compensation expense at

December

31,

2016,

and the weighted-average period to recognize the remaining unrecognized shares are as follows:

	Stock-Based Compensation
	Recognized December 31,						Unrecognized
	2016		2015		2014		December 31, 2016		Weighted- Average Period to Recognize (years)
Stock Options	$	909	$	1,546	$	1,866	$	134		0.2
Restricted Stock Units		6,325		7,409		7,881		14,030		2.4
Cash-Settled Restricted Stock Units		7,091		4,414		3,207		17,114		2.7
Non-Employee Director Awards		741		645		481		—		—
Performance Shares		877		727		—		2,346		1.6
	$	15,943	$	14,741	$	13,435	$	33,624

The assumptions of

employment termination forfeiture rates used in the determination of fair value of stock awards during calendar year

2016

were based on the Company’s historical average from

October

2006

through the

months preceding the reporting period. The expected annualized forfeiture rates used varied from

3.7%

9.4%,

and the Company does not expect these termination rates to vary significantly in the future.

Stock Options

Option awards are granted with an exercise price equal to the market value of the Company

’s common stock on the date of grant. All options outstanding as of

December

31,

2016

have a

-year contractual term. Options generally have a vesting term of

three

four

years. There were

option awards granted during

2016

and

2015.

The fair value assumptions using the Black-Scholes-Merton pricing model for awards granted in

2014

were

5.1

years for the expected life,

33.0%

for historical volatility, and

1.5%

for the risk-free rate of return.

The following table summarizes the changes in outstanding stock options:

	Number of Shares			Weighted Average Exercise Price		Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2014		694,552		$	24.34
Exercised		(85,063	)	$	21.53
Granted		166,861		$	40.68
Forfeited/Expired		(9,426	)	$	25.53
Outstanding at December 31, 2014		766,924		$	28.20
Exercised		(43,919	)	$	21.23
Granted		—		$	—
Forfeited/Expired		—		$	—
Outstanding at December 31, 2015		723,005		$	28.62
Exercised		(128,301	)	$	23.65
Granted		—		$	—
Forfeited/Expired		(7,297	)	$	40.68
Outstanding at December 31, 2016		587,407		$	29.56	$	15,064

Vested plus expected to vest at December 31, 2016		587,204		$	29.55	$	15,061
Exercisable at December 31, 2016		535,376		$	28.47	$	14,308

The aggregate intrinsic value in the preceding table is based on the Company

’s closing stock price of

$55.20

as of

December

31,

2016.

The total intrinsic value of options exercised was

$2.5

million,

$0.8

million, and

$1.5

million for the years ended

December

31,

2016,

2015,

and

2014,

respectively. The weighted average grant date fair value of options granted was

$13.00

for the year ended

December

31,

2014.

The fair value of shares vested was

$1.3

million,

$2.0

million, and

$1.8

million for the years ended

December

31,

2016,

2015,

and

2014,

respectively. As of

December

31,

2016,

the weighted-average remaining contractual term for options vested and expected to vest was

5.7

years, and for exercisable options was

5.5

years.

Information regarding stock options outstanding as of

December

31,

2016

is summarized below:

			OPTIONS OUTSTANDING						OPTIONS EXERCISABLE
Range of Exercise Prices			Number Outstanding As of December 31, 2016		Weighted Average Remaining Contractual Term		Weighted Average Exercise Price		Number Exercisable As of December 31, 2016		Weighted Average Exercise Price
$ 9.05	–	$25.00		131,267		3.7	$	23.37		131,267	$	23.37
$25.01	–	$28.00		300,107		5.8	$	26.48		300,107	$	26.48
$28.01	–	$41.00		156,033		7.1	$	40.68		104,002	$	40.68
$9.05	to	$41.00		587,407		5.7	$	29.56		535,376	$	28.47

Restricted Stock Units

RSUs generally have a vesting term of

three

four

years.

Upon vesting, the employee is issued

one

share of stock for each RSU he or she holds. The fair value of shares vested was $

7.2

million,

$6.3

million, and

$8.2

million for the years ended

December

31,

2016,

2015,

and

2014,

respectively.

A summary of the Company

’s RSUs is presented below.

	Number of Shares			Weighted- Average Grant Date Fair Value		Aggregate Intrinsic Value (in thousands)
Non-vested RSUs at January 1, 2014		756,188		$	25.13
Granted		265,811		$	39.48
Vested		(333,321	)	$	24.73
Cancelled		(44,791	)	$	27.33
Non-vested RSUs at December 31, 2014		643,887		$	31.10
Granted		250,159		$	39.04
Vested		(233,899	)	$	26.85
Cancelled		(104,243	)	$	36.76
Non-vested RSUs at December 31, 2015		555,904		$	35.40
Granted		240,868		$	34.68
Vested		(221,659	)	$	32.45
Cancelled		(67,115	)	$	37.60
Non-vested RSUs at December 31, 2016		507,998		$	36.12	$	28,041
RSUs expected to vest in the future		507,998		$	36.12	$	28,041

The aggregate intrinsic value

in the preceding table is based on the Company’s closing stock price of

$55.20

per share as of

December

31,

2016.

Cash-Settled Restricted

Stock Units

CSRSUs generally have a vesting term of

four

years. A summary of the Company’s CSRSUs is presented below.

				Weighted-
	Number of Shares			Average Grant Date Fair Value		Aggregate Intrinsic Value (in thousands)
Non-vested CSRSUs at January 1, 2014		200,299		$	28.23
Granted		416,432		$	39.12
Vested		(47,742	)	$	27.55
Cancelled		(31,870	)	$	32.12
Non-vested CSRSUs at December 31, 2014		537,119		$	36.36
Granted		121,015		$	39.35
Vested		(78,033	)	$	33.29
Cancelled		(133,438	)	$	38.14
Non-vested CSRSUs at December 31, 2015		446,663		$	37.18
Granted		233,790		$	34.29
Vested		(146,619	)	$	34.70
Cancelled		(70,812	)	$	37.55
Non-vested CSRSUs at December 31, 2016		463,022		$	35.96	$	25,559
CSRSUs expected to vest in the future		463,022		$	35.96	$	25,559

The aggregate intrinsic value in the preceding table is based on the Company

’s closing stock price of

$55.20

per share as of

December

31,

2016.

The fair value of CSRSUs vested and settled in cash for the years ended

December

31,

2016,

2015,

and

2014

was

$5.9

million,

$2.9

million and

$1.7

million, respectively.

Non-Employee Director Awards

The Company grants

awards of unregistered shares to its non-employee directors on a quarterly basis under its Annual Equity Election. The awards are issued from the Company’s treasury stock and have no impact on the shares available for grant under the Omnibus Plan. Non-employee director awards do not include vesting conditions; thus, there was

unrecognized expense related to these awards at

December

31,

2016.

A summary of the Company

’s non-employee director awards granted by fiscal year is presented below.

For the Year ended December 31,	Number of Shares Granted		Weighted- Average Grant Date Fair Value
2014		15,872	$	36.08
2015		18,109	$	35.62
201 6		15,299	$	39.32

Performance Shares

In the

first

quarter of

2015,

the Company

’s Board of Directors approved a performance-based share program (the “Program”) that provides for the issuance of PSAs to its senior management. Under the Program, the number of PSAs that the participant will receive depends on the Company’s achievement of

two

performance goals during

two

performance periods. The performance goals under the Program are based on a performance condition (i) the Company’s compounded annual growth rate in earnings per share (“EPS”) during a performance period from

January

2015

through

December

31,

2016,

and a market condition (ii) the Company’s cumulative total shareholder return (“rTSR”) relative to its peer group during a performance period from

January

2015

through

December

31,

2017.

The PSAs will only be eligible to vest following the expiration of the

three

-year performance period ending on

December

31,

2017.

Actual shares vested will be subject to both continued employment by the Company (barring certain exceptions allowing for partial performance periods) and actual financial measures achieved. The actual number of shares of common stock that will be issued to each participant at the end of the applicable performance period will be determined by multiplying the award by the product of

two

percentages,

one

based on the Company’s EPS performance and a

second

one

based on the Company’s rTSR performance, subject to a minimum and maximum performance level.

A summary of the Company

’s PSAs is presented below.

				Weighted-
	Number of Shares			Average Grant Date Fair Value		Aggregate Intrinsic Value (in thousands)
Non-vested PSAs at January 1, 2015		—			—
Granted		58,822		$	44.21
Vested		—			—
Cancelled		—			—
Non-vested PSAs at December 31, 2015		58,822		$	44.21
Granted		74,574		$	37.75
Vested		—			—
Cancelled		(3,422	)	$	41.61
Non-vested PSAs at December 31, 2016		129,974		$	40.57	$	7,175
PSA s expected to vest in the future		129,974		$	40.57	$	7,175

The aggregate intrinsic value in the preceding table is based on the Company

’s closing stock price of

$55.20

per share as of

December

31,

2016.

The fair value of the awards is estimated on the grant date using a Monte Carlo simulation model due to the market condition for the rTSR component. The fair value assumptions using the Monte Carlo simulation model for awards in

2015

and

2016

were

0.0%

for both dividend yields,

29.3%

and

30.9%

for historical volatility, respectively, and

1.0%

for both risk-free rate of returns, respectively.